Gov’t to scrap housing sector cooling measures to boost ailing market

The SAR government plans to scrap housing market cooling measures amid calls from the property sector as demand continues to weaken.

The Executive Council submitted Friday a policy proposal to the Legislative Assembly (AL) to adjust the measures regulating real estate demand in Macau, as well as the tax measures in these regulations, which are a decade old.

According to the council, the proposal to eliminate tax measures associated with real estate demand has been submitted to the AL and will undergo an expedited process for swift implementation.

The draft proposes to abolish the special stamp duty, additional stamp duty, and stamp duty on acquisition, as well as easing mortgage lending restrictions, increasing the maximum loan-to-value ratio to 70% for Macau residents and 90% for affordable housing purchases.

For mortgages, the Monetary Authority of Macao will standardize the maximum loan-to-value ratio at 70% for both residents and non-residents (90% for affordable housing) and suspend the requirement to stress test for a 2% interest rate increase.

These measures were initially established from 2010 to maintain the stable development of the real estate market.

However, several property associations and realtors have long called for the government to fully lift its cooldown measures following the pandemic, particularly after foreseeing a tough real property market in Macau in 2024.

According to the current environment, even if the government launches another land auction, there will be no bidders.

Last year, the transaction volume dropped another 3%, compared to 2022.

Oliver Tong, general manager at JLL in Macau and Zhuhai, has welcomed the Macau government’s decision to remove all cooling measures in the housing market.

However, JLL has noted the economy remains weak, and the return of tourists benefits a few industries only.

“Coupled with high interest rates, the impact of the removal of cooling measures may not be as significant as what was witnessed in Hong Kong,” Tong said.

“It may encourage the local people to buy new flats for upgrading and could help ease the downward pressure on the housing prices,” he added.

Meanwhile, the realtor has revised its forecast on mass residential prices from a 0-5% decline to a stable trend, similar to luxury residential properties.

The transaction volume in secondary markets is expected to increase slightly, while the performance of the primary market would depend on whether developers will further cut asking prices to attract buyers.

“Otherwise, the sales of new flats are unlikely to rebound significantly.”

“We are not going to see the influx of mainland buyers in Macau’s housing market as they still prefer to invest in Hong Kong’s housing market,” said Tong.

Hong Kong in February scrapped all buy-side property tightening measures for residential properties with immediate effect, leading to a rise in stocks of its property developers.

Despite efforts to stimulate the market, including halving the buyers’ stamp duty and waiving duties for certain resales, the property sector has seen a significant downturn, with transactions at a 33-year low and prices dropping to a record low since February 2017.

The luxury market has experienced a sharp decline in prices.

The neighboring region considers that the “relevant measures are no longer necessary amidst the current economic and market conditions.”